MLM Company Shuts Down: What to Do if Your Network Marketing Company Closes

I had a great conversation with a successful network marketer and close friend yesterday (Herb). He asked me if I could write a post about “what you should do if your MLM Company closes or shuts down” so I figured I would do him a favor and write a post about it. I figured other people would be interested in this topic as well.

I should start out by telling you that most companies fail, inside and outside of the network marketing industry. Building a successful, long-term company is a challenging task in any industry. Just ask any entrepreneur!

Drive through any town in America and you will see what I am talking about. Not only are there empty office buildings everywhere, but most of the businesses that are around today weren’t there five years ago. And five years from now, most of the businesses around will be different businesses than the ones that are there today.

Even in the network marketing industry, many companies don’t make it to the five year mark, let alone the ten or twenty year mark. That is one of the biggest reasons I am a huge fan of working with established network marketing companies. They’ve already gone through the growing process, worked through the kinks, and prepared themselves for long-term growth.

I’ve heard countless stories through the years of people who spent years building a successful downline in their network marketing company, only to have their company close its doors. I can’t even imagine what that would feel like for someone who has poured their heart and soul into a company. Talk about disappointment, anger, frustration and resentment.

I also have a lot of sympathy for the new or inexperienced distributor who joins a network marketing company only to have it close down a few months later. This can leave a bad taste in their mouth and make them vow to never do network marketing again.

The bottom line is that when a network marketing company shuts down, NO ONE WINS. Distributors lose commission checks. Employees of the company lose their job. And the owners of the company normally lose millions. Our industry even takes a hit when this happens. Talk about a lose-lose proposition.

So, is it possible to avoid working with a company that might shut down one day? My immediate answer is NO. There are so many things out of your control, and even out of the company’s control to say it could never happen.

That being said, I would tell you to pick your company wisely. Do your homework before you join a network marketing company and don’t join a company that is less than five years old (just my thoughts).

Furthermore, what can you do if your MLM Company closes its doors for good? As I see it, you really have three courses of action. That’s what I’m going to talk about in the rest of this post.

# 1 Leave the Industry for Good

Your first course of action is to leave the network marketing industry for good. Many people will choose this route, especially new distributors or people who didn’t earn a lot of money with their company. Because of their inexperience, or lack of belief in the industry, they might think this is the norm in our industry.

After working with a company for any period of time, and it closes its doors, the distributor might have a bad taste for network marketing and vow never to do it again.

Before you choose this course of action, I want you to know something. Most successful entrepreneurs (in any endeavor) failed several times before they became successful.Success is seldom a straight line and very, very few people are successful in their first business venture.

Although you might be disappointed with your network marketing company and with the industry for letting you down, I don’t think this is a very good course of action for most people.

# 2 Spend Three to Six Months to Decompress

Another common reaction might be to do nothing right away. Just take some time and decompress, collect your thoughts and evaluate your experience. Spend some time thinking about why the company failed, and how you could prevent this from happening to you again in the future.

I believe that every experience can be a learning experience, IF you take the time to reflect on the experience and look at it objectively.

Personally, I believe this is the best course of action for most people. Spending 90 to 180 days to reflect on the experience is much better than just jumping ship and joining a new company right away, or leaving the industry for good (as I see it).

# 3 Find a New Company Right Away

The last course of action is simply to find a new company right away. Maybe you were already promoting multiple companies. Maybe you already had your eyes set on another company. In either case, even if you’re thinking about joining a new company right away, I would at least spend a few weeks to analyze several companies, so you have something to compare it to.

Believe it or not, teaming up with a MLM Company is a MAJOR decision, even if you don’t think of it that way. If you were going to buy a franchise or start a traditional business, I know you would do your due diligence and research before you got started. Treat your next MLM Company the same way. Pretend that you’re investing MILLIONS of dollars in it, even if it’s only a few hundred dollars to join.

Research the company. Evaluate their product line. Talk to the corporate team and some successful distributors. Find out the good and bad about the company. After you do these things, then you can make an informed decision.

Whatever you do, don’t make a rash, uneducated decision that will only lead to more disappointment.

What Would I Do If My MLM Company Closed Down?

If my MLM Company shut down today, this is what I would do:

Take 30 to 90 days to decompress and collect my thoughts

Research five to ten other network marketing companies that interest me

Try out the products from each company as a customer first

Do a thorough analysis of each company

Talk to the corporate team and successful distributors from each company

Pick the company that I believed offered the best products and opportunity

I should also disclose that I am already SOLD on the industry and want to make a career out of it. Everyone’s situation is different, so don’t think you need to do what I would do.

Additional Considerations

Here are some additional questions you could ask yourself to help you through your decision making process.

Do I really want to make a career out of my network marketing?

What do I like and dislike about the industry?

What type of product line would I like to represent?

What type of compensation plan would I like to participate in?

What did I like and dislike about my previous company?

Why did my company fail and how can I prevent it from happening in the future?

The Most Important Lesson

Always remember this. Your network is your greatest asset. No, I’m not talking about your downline either. I’m talking about your list of names of people that know you, like you and trust you. It could be people on your auto-responder list or in your address book.

I’ve found that successful network marketers are always focused on growing their network. They’re always expanding their network, not just to build their current business, but to ensure long-term success in this industry. If you have a large network of people who know you, like you and trust you, and your company closes, it’s easy to rebuild. If you don’t have a large network, it will be a big challenge. Never forget that.

Final Thoughts

I hope you are never in a situation where your MLM Company closes its doors. Although it can be a great learning experience, it can also be very stressful and disappointing. I truly believe that if you follow the advice mentioned in this post, you can make a good decision about what to do if this happens to you.

What are your thoughts? What do you tell people to do if their MLM Company shuts down? Has this ever happened to you? Leave a comment below to share your thoughts. I look forward to hearing from you.

About chuckholmes

Chuck is a Network Marketing Professional, author, Certified Small Business Coach and blogger. He's been in the industry since 2002. He enjoys reading, writing, exercising, BBQ, buying and selling antiques, and watching funny movies. He lives in Homosassa, Florida with his wife, Rachel.

9 thoughts on “MLM Company Shuts Down: What to Do if Your Network Marketing Company Closes”

I also don’t know what I would do in this situation. If it were me personally, I would like to think that I would take a couple months to decompress, and research other companies as you said. That seems like the wisest option, but it would really depend on circumstances.
If I were advising someone who was a part of an MLM team that had shut down, I would tell them which option sounded best to me, but also talk them through the other options, because really it all depends on the person and their circumstances.

Many companies go out of business, both inside and outside the network marketing industry. If your company closes down, spend some time to regroup and then decide if you want to start over or move on to another industry.

First, I hope that it never happens to anyone. Especially to a person who has built a large operation.

If I were in that position, it is hard to say how I would react. I do believe that if I had a large following, I would immediately join a new company and bring my team with me. If I were new, I don’t know if I would join another company or not.

One thing is for sure, it has happened to traditional businesses too. No one company is necessarily safe from going under.

If we use money to invest in other forms, we can insure ourselves from disasters. It reminds me of back in 2007 or 2008, I had the opportunity to invest in 1 ounce gold coins at approximately $400 a piece, I had the money, but I passed. I should not have. Those same coins are worth about $1300 each now.

When we have extra, we should always look for good investment opportunities. As Chuck said: diversify and win. If nothing else, get a good interest paying savings account or CD.

I know a number of MLM professionals who have been in multiple companies over their careers. One great thing for the true professional is that they’ve acquired the skills and mindset to make it again and again, and they usually become more successful with each subsequent venture. So although it’s a definite disappointment when a company shuts down, tthey’re in a great place to make it happen quicker the next time.